Amaya Gaming said to be near takeover deal of PokerStars gambling site

PokerStars, the world’s largest poker website, is near a deal to be acquired by Amaya Gaming Group Inc., a maker of gambling equipment and systems, according to two people with knowledge of the situation.

An announcement may come Thursday, said one of the people, who asked not to be named because the talks aren’t public. Blackstone Group LP’s credit business, GSO Capital Partners LP, is among the backers of Amaya’s bid, arranging more than US$1 billion in financing, according to one of the people. Amaya was halted in Toronto today after surging 28.7% in two days.

A deal would mark a significant leap for Amaya in the US$4 billion global business of online poker. The company, based near Montreal, generated $155 million in revenue last year. For PokerStars, new ownership may remove an obstacle to a return to the U.S. Past clashes with authorities have prevented the site from taking part in online gambling, now legal in three states.

Amaya, based in Pointe-Claire, Quebec, surged to $14.08 before trading was halted. The shares have advanced 77% in 2014.

Tim Foran, a spokesman for Amaya, declined to comment in an e-mail yesterday, citing company policy not to comment on rumors or speculation. Eric Hollreiser, a spokesman for PokerStars, also declined to comment, as did Blackstone spokeswoman Christine Anderson.

Related

PokerStars agreed in 2012 to pay US$731 million to settle money-laundering charges with the Justice Department. Isai Scheinberg, identified by prosecutors as the founder of PokerStars, remains under indictment in the U.S.
The deal would involve the purchase of PokerStars parent Rational Group Ltd., which is based in the Isle of Man, according to people close to deal.

Blackstone, based in New York, is preparing to announce its largest-ever credit deal, with more than US$1 billion of fund commitments, an executive said today.

The agreement, which the firm expects will be announced as soon as today, is an acquisition financing for a North American company, Bennett Goodman, the head of Blackstone’s credit business, said at the firm’s fourth investor day in New York.
The commitment spans three Blackstone funds, Goodman said. He didn’t name the business involved in the credit deal.

The talks between Amaya and PokerStars were reported in May by the website CalvinAyre.com.

Poker Market

Global online poker revenue dipped slightly last year as the business matured in markets such as Europe, players explored other games and PokerStars’ dominance squeezed competitors, according to Simon Holliday, founder of the research firm H2 Gambling Capital.

Betting volume is critical in poker because gamblers gravitate toward sites with more choices of games and wager amounts. The U.S. is crucial for future growth, Holliday said.

“This could be massive as it should be the key for the PokerStars brand, technology, client lists and expertise all to gain access to the thus far slow-to-take-off U.S. onshore regulated market,” Holliday said in an e-mail today.

Online gambling revenue in New Jersey, the most-populous state to allow it, fell for the second month in a row to US$10.5 million in May, according to data released today by the New Jersey Division of Gaming Enforcement. The state began allowing online bets in November.

Return Blocked

PokerStars has been stymied in its attempts to enter the new U.S. markets. Last year New Jersey regulators suspended their review of the company’s gambling license for two years after a complaint by the American Gaming Association, which represents U.S. casino operators.

PokerStars has recently lobbied to get language taken out of proposed online gambling legislation in California that would preclude operators that took bets in the U.S. after Congress passed the Unlawful Internet Gambling Enforcement Act in 2006.
Isai Scheinberg and 10 other online gambling executives were accused in 2011 of conspiring to break that law, which prohibits banks and others from accepting payments for illegal online gambling.

Since then, Nevada, Delaware and New Jersey have legalized Internet betting. Although PokerStars settled two years ago, Scheinberg remains under indictment and unarrested, according to Betsy Feuerstein, a spokeswoman for Preet Bharara, the U.S. Attorney for the Southern District of New York.

Active Investor was produced by Postmedia's advertising department in collaboration with iShares by BlackRock to promote awareness of this topic for commercial purposes. Postmedia's editorial departments had no involvement in the creation of this content.